The Morning Playbook

Top of the Morning

Barry Ritholtz, CEO of Fusion IQ and an acclaimed financial writer in his own right, notes that a disconnect between markets and the real economy is far from abnormal – in fact, it’s the status quo:

As to the markets, I hope you realize they are separate and apart from the economy. The data overwhelmingly shows that most of the time, stocks and economy are wholly uncorrelated. Over the short and medium term (days weeks months), there is almost no relationship in either direction or magnitude. People often have difficulty accepting that, but the academic studies on it are overwhelming.

On The Homefront

After yesterday’s near triple-digit loss, TSX 60 futures are in the red this morning. The Materials sector, especially gold mining stocks, could be in for a rough day. Gold has tumbled to $1300 this morning, down 5 percent, its lowest price in two and a half years.

When BoC Governor Stephen Poloz spoke yesterday, the loonie showed very little volatility. That all went out the window once the FOMC and Ben Bernanke took center stage. The loonie dropped from 0.983 to a low of 0.964 against the greenback this morning. Interestingly enough, the loonie fell more in the half and hour following the release of the FOMC statement and projections than during the Chairman’s press conference.

Statistics Canada released the national balance sheet and financial flow accounts for the first quarter, which showed national net worth rose to $7.1 trillion, up 2.1 percent from Q4.

Daily Dispatches

The HSBC Flash Manufacturing PMI slipped to 48.3 in June, over a full point lower than the previous month’s flash reading and this month’s consensus estimate. A reminder that any reading below 50 indicates contraction, while a reading above 50 indicates expansion. That marks a 9-month low for the headline number. Output, which expanded in May, contracted in June. New export orders, a sub-index more indicative of the global economy than the Chinese manufacturing sector, plummeted.

Eurozone Flash Manufacturing PMIs indicate that the sector continues to contract, but at a slower pace.

U.S. jobless claims came in higher than expected at 354K, though the four week moving average remains below 350K. Flash Manufacturing PMI came in close to expectations at 52.5 in June, while May’s reading was revised upwards from 51.9 to 52.3.